The prices of some products on Temu’s US site have doubled

The Nikkei learned on April 28 that on the US site of the cross-border e-commerce platform “Temu”, the prices of some products shipped from China have increased by more than 2 times. This move is a response to the Trump administration’s cancellation of the tax-free policy for small packages. This change has also affected Chinese products sold on the Amazon platform in the United States, and the frequent price increases indicate that the impact of tariffs is gradually extending to American consumers.

Temu’s sharp price increase targets those products that are directly delivered from China to American consumers after receiving orders. The “import fees” that were not previously charged are now included, and are often higher than the price of the product itself. When consumers select products and enter the checkout page, the total order amount will suddenly soar to more than twice the amount initially displayed.

For example, in Temu’s “Best Sellers” section, a pair of women’s sandals priced at $13.2 when purchased in California, the United States, in addition to the $1 sales tax, will also be charged an import fee of $18.3, and the final price will be $32.5, about 2.5 times the original price.

Similarly, a small steam iron was initially listed at $26, but soared to $60 at checkout.

Chinese e-commerce forced to change business model

Temu explained on its website about the newly introduced import fees: “This is to cover the handling fees related to customs, including the import handling fees we pay to the customs authorities on your behalf.”

Like Temu, clothing e-commerce platform SHEIN has also started price increases in the United States.

The reason why Temu and SHEIN increased their prices is that the US government canceled the tax exemption for small packages under $800. The two platforms used a system called “de minimis rule” to import goods from China to the United States to lower the sales price.

Trump decided to revoke this system through an executive order. At the same time as the tariffs on China were imposed, the tariff rate on small imports from China was also increased. From May 2, imported goods need to pay a tariff of 120% of the estimated value or $100 per item (from June 1, $200).

Temu is controlled and operated by Pinduoduo, a Chinese online shopping company. SHEIN is headquartered in Singapore and mainly produces through garment factories in China. The two companies have won the support of American consumers with low prices amid inflation in the United States, but the business model of exporting cheap Chinese products directly to overseas will be forced to adjust.

Temu has begun to take countermeasures. Since the US Biden administration has begun to consider canceling the tax-free policy for small packages, Temu has increased the products that can be shipped from domestic warehouses in the United States. Currently, Temu highlights the products that are in stock in the United States on its US website. In the future, since most of these products are also made in China, if the inventory is exhausted, the price may also increase due to the impact of tariffs.

Amazon sellers say “need to increase prices by 50%” and cancel participation in Prime Day activities

Sellers on Amazon, the largest online shopping platform in the United States, have also begun to increase prices for Chinese products. Chinese electronic equipment manufacturer Anker Innovations has raised prices for all products such as mobile phone chargers.

This price increase trend is expected to expand further. Brian Miller, who lives in Shenzhen and sells Chinese-made plastic toys in the United States through Amazon, said that since tariffs will be imposed starting from the transportation of the next batch of goods, he plans to increase prices after May. He said: “Our margins are already very thin, and even if we cut manufacturing costs, it will not have much effect.” Some products need to increase prices by 50%.

Wedbush Securities in the United States speculates that up to 70% of the products sold by Amazon are made in China. It is widely believed that Amazon’s large membership promotion event “Prime Day” every summer will also be affected by tariffs.

Originally, this is the time to prepare inventory for the July promotion, but Scott Miller, an American consultant responsible for supporting Amazon sellers, revealed: “Some sellers are canceling orders to China or reducing advertising spending.” According to Reuters on April 28, several Amazon sellers have decided not to participate in this year’s Prime Day event.